Paraguay Maintains Rate as Inflation within Target Range

By Peter Nielson on April 25, 2018

Paraguay’s central bank left its monetary policy rate at 5.25 percent, saying the most prudent strategy is to continue with the current monetary policy settings as inflation remains consistent with the objective and expectations remain anchored to this goal.

The Central Bank of Paraguay (BCP), which has maintained its rate since cutting it by 25 basis points in August 2017, added the decision by its markets operation committee (CEOMA) was unanimous.

Today’s decision by BCP comes as the runner-up in Sunday’s presidential election, Efrain Alegre, demanded a recount, saying he had evidence of fraudulent voting.

The official elections tribunal said Mario Abdo had won 46.44 percent to Alegre’s 42.74 percent. Abdo is the son of the late private secretary of dictator Alfredo Stroessner, who ruled Paraguay for 35 years until 1989.

Voters were picking the successor to President Horacio Cartes who introduced the country to international capital markets in 2013. Since then Paraguay has tapped bond markets five times, most recently in March when it raised $530 million in 30-year bonds at a yield of 5.6 percent.

Paraguay’s inflation rate was steady at 4.1 percent in February and March, within the central bank’s target of 4.0 percent, plus/minus 2 percentage points.

Paraguay’s economy expanded by an annual rate of 3.0 percent in the third quarter of 2017, up from 1.1 percent in the second quarter.

The exchange rate of the guarani, which fell sharply from September 2014 to January 2016, has been appreciating slightly this year, quoted at 5,564.9 to the U.S. dollar today, up 0.6 percent.

This article originally appeared on CentralBankNews.info and is reproduced here with permission from the author.